Promissory Note Rate Limits by State

Each state sets a maximum legal interest rate (the usury limit). Charging above it can void the excess interest or, in some states, the whole note.

Legal interest rate limits

Usury penalties

Crossing the limit can forfeit the interest or, in some states, the principal. Keep the rate at or below the state cap shown above.

Compounding rules

Some states limit how often interest compounds and require the method to be stated in the note. Always write the rate and the compounding clearly so the borrower understands the cost.

Notes by state

California

In California, keep the note rate at or below the lawful cap so the agreement stays enforceable. California uses form REG 135 for vehicle bills of sale, signed by buyer and seller. A Los Angeles buyer submits it with the title to the DMV. A smog check usually accompanies the private sale.

Texas

In Texas, keep the note rate at or below the lawful cap so the agreement stays enforceable. Texas bills of sale should list the VIN, odometer, and sale price for the title. A Houston buyer submits it to the county tax office. Notarization is not mandatory.

New York

In New York, keep the note rate at or below the lawful cap so the agreement stays enforceable. New York uses form MV-912 for vehicle registration, and a notary is not mandatory. A Buffalo buyer submits the bill of sale with the title. The sale price supports tax.

Florida

In Florida, keep the note rate at or below the lawful cap so the agreement stays enforceable. Florida recommends a notarized vehicle bill of sale and a title transfer within 30 days. A Miami buyer files it with the county tax collector. The form sets the official sale date.

Illinois

In Illinois, keep the note rate at or below the lawful cap so the agreement stays enforceable. Illinois does not require notarization, but both signatures should appear. A Chicago seller lists the VIN and mileage clearly. The buyer keeps it for the title transfer.

Ohio

In Ohio, keep the note rate at or below the lawful cap so the agreement stays enforceable. Ohio bills of sale should include the VIN for a vehicle title transfer. A Columbus buyer files it with the title. Notarization is not required.

Georgia

In Georgia, keep the note rate at or below the lawful cap so the agreement stays enforceable. Georgia bills of sale should include the VIN for the title transfer. An Atlanta buyer submits it to the tag office promptly. Notarization is optional but tidy.

North Carolina

In North Carolina, keep the note rate at or below the lawful cap so the agreement stays enforceable. North Carolina bills of sale should include the title number and odometer reading. A Charlotte buyer uses it at the DMV. Notarization is optional.

Pennsylvania

In Pennsylvania, keep the note rate at or below the lawful cap so the agreement stays enforceable. Pennsylvania bills of sale should include the VIN and both signatures. A Philadelphia buyer files it with the title. Notarization is optional in the commonwealth.

Michigan

In Michigan, keep the note rate at or below the lawful cap so the agreement stays enforceable. Michigan bills of sale are used for vehicle transfers, and notarization is not mandatory. A Detroit buyer attaches it to the title packet. The VIN must appear.

LegalForge templates are prepared for general educational use. This is not legal advice. Laws vary by state, so have a licensed attorney in your state review any document before you sign it.